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State Railway: Land rich but loses money

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State enterprise with worst financial performance finally reports on assets, liabilities & losses. Essential step in restructuring for efficiency. 

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In a related story, read about the recent handover of Chatuchak Market from the Bangkok Metropolitan Administration (BMA) to the State Railway of Thailand (SRT) that worried many because of SRT's well-known inefficiencies here.

Also past stories about restructuring the State Railway of Thailand (#1, #2, #3, #4, #5 and as one of Thailand's investment challenges)

Click button to listen to State Railway Financial Reports to download

TRANSPORT: State railway to finally account for assets and liabilities by Wichit Chantanusornsiri


The State Railway of Thailand, the country's worst-performing state enterprise financially, is finalising its first accounting of its assets and liabilities in more than a decade.

Prasong Poonthanet, the director-general of the State Enterprise Policy Office, said that while the railway operator had the greatest losses among the country's state enterprises, it was technically solvent, with assets valued at considerably more than its debt.

But the SRT's finances have suffered from the failure to properly value and manage its assets, which include large landholdings across the country.

Mr Prasong said the SRT also lacked systematic controls and accounting systems, causing lost revenues and waste.

He said the SRT had no clear system to monitor lessees of its properties, resulting in wasted time and opportunity costs in cases of disputes or failure to meet contract obligations.

For 2010, the SRT reported a preliminary loss of 7.58 billion baht, with accumulated losses of 57.3 billion baht. Assets were recorded at 124 billion baht against liabilities of 85.7 billion.

In terms of key financial ratios, the 2010 accounts show a return on assets of -6.7%, with return on equity of -19.36% and a debt-to-equity ratio of 2.19 times. Net profit margin was -56.34% for 2010.

The agency's poor finances stem in part to high operating expenses due to outdated equipment, heavy pension expenses and debt service costs.

Only half of the SRT's trains are considered usable, with an average age of 45 years for rolling stock and 34 to 37 years for its rail networks.

The SRT is also limited in its ability to price fares to match its costs, due to government policies aimed at curbing rail fares for commuters.

Efforts to restructure the agency over the past several years have made little headway, in part due to weak information databases and conflicting accounts.

The SRT's assets for instance show considerable discrepancies from its own inventory records, leading the Auditor General's Office to consistently refuse to offer an opinion on its annual financial records.

In any case, the government has earmarked 176 billion baht in funds for rail investment by the SRT through 2014.

The government also is in the process of splitting its operations into distinct business units, covering rail operations, asset management and maintenance functions.

New businesses meanwhile will be developed under 100%-owned subsidiaries, such as Airport Rail Link Co, which operates a light-rail system from inner Bangkok to Suvarnabhumi Airport, and a company set up to operate the Chatuchak Weekend Market, a popular spot located on SRT land.

(Source: Bangkok Post, TRANSPORT, State railway to finally account for assets and liabilities, 23/01/2012, Wichit Chantanusornsiri, link

Accounting and Financial Reporting Vocabulary

State Railway of Thailand (SRT) - the state-owned rail operator of Thailand's railway, การรถไฟแห่งประเทศไทย (See Wikipedia)

railway - the transport of passengers and goods by trains on rail tracks (instead of more expensive trucks on the road) (See Wikipedia)
transport - the activity of moving people (passengers) and things (cargo) from one place to another การขนส่ง
state railway - Same as "State Railway of Thailand"

Chatuchak Weekend Market - the famous weekend market in Bangkok which is the largest market in Thailand, covers over 35 acres (1.13 km²) with more than 5,000 stalls and an estimated 200,000 visitors each day, "most stalls only open on Saturdays and Sundays though Jatujak Plaza, the western section is open daily. In the north west corner is the J.J. Mall, with three floors of assorted oddments as well as eateries. The market offers a wide variety of products including household items, clothing, Thai handicrafts, religious artifacts, collectibles, foods, and live animals. For tourists, there are a number of onsite companies who will send purchases abroad. Chatuchak Market owes its origin to Field Marshal Plaek Phibulsongkram, the late prime minister of Thailand (1938–1944, 1948–1957), who came up with the idea of setting up a flea market in every town. As a result, the first flea market in Bangkok was held at Sanam Luang and was called Sanam Luang flea Market," also called Jatujak or JJ Market จตุจักร (See Wikipedia)

Bangkok Metropolitan Administration (BMA) - the name given to the local government of Bangkok or Krung Thep Maha Nakhon: "includes the capital of the Kingdom of Thailand. The government comprises two branches: the executive (or the Governor of Bangkok) and the legislative (or Bangkok Metropolitan Council). The administration's roles are to formulate and implement policies regarding the management of Bangkok, these include: transport services, urban planning, waste management, housing, roads and highways, security services and the environment" กรุงเทพมหานคร (See Wikipedia)

handover - giving to another
efficiency -
ability to do something well and achieve goals without wasting time and money
inefficiency -
not being efficient (wasting time and money when you do something)

worst - most + bad
worst performing - did the worst job achieving its goals
financially worst-performing - did the worst job achieving its financial goals (making money, or at least not losing money) 
worst-performing financially  
worst-performing state enterprise financially  
enterprises - companies; an organization, especially a business กิจการ, บริษัท,อุตสาหกิจ,วิสาหกิจ

state - government รัฐ
state enterprises - companies that are owned and operated by the government
the country's worst-performing state enterprise financially

Accounting Vocabulary

accounting - the work of keeping and checking financial records for a company or organization, also called "accountancy" (See Wikipedia)
accountant - a skilled professional doing accounting as their work (See Wikipedia)
accounts - the accounting records of a company, the records of money paid, received or owed over a period of time by a company
the 2010 accounts

assets - things owned, especially property and money; for example: stocks, bonds, real estate, loans to others, or money สินทรัพย์
assets were recorded at 124 billion baht against liabilities of 85.7 billion

debt - an amount of money that you owe someone หนี้
liabilities - debts; the amount of money that a company owes หนี้สิน หนี้ขององค์กร (balance sheet: liabilities + owners' equity = assets))

financial ratios -
ratios of numbers in a company or organization's balance sheet and financial reports used by accountants to measure the financial condition and health of the company or organization (See Wikipedia)
key financial ratios - important financial ratios

profit
- money that you make from selling goods and services after all your costs have been paid กำไร
profit margin - Same as "net profit margin"
net profit margin - measure of how efficiently a business is run and how successful its price levels are, calculated by dividing its operating income by its net sales, also sometimes called just "profit margin" (See Wikipedia)

in terms of -
measured by

return on assets (ROA)
- a measure used to measure how well a company or organization uses assets to generate a return or profit from the assets, shows profits for year as percentage of recent total assets (See Wikipedia)

debt-to-equity ratio
- a measure of how much debt (loans, bonds) that a a company or organization uses to pay for and finance activities compared to the money invested by shareholders who own stock shares (See Wikipedia)

the 2010
accounts show a return on assets of -6.7%, with return on equity of -19.36% and a debt-to-equity ratio of 2.19 times.
net profit
margin was -56.34% for 2010.

in
terms of key financial ratios, the 2010 accounts show a return on assets of -6.7%, with return on equity of -19.36% and a debt-to-equity ratio of 2.19 times. Net profit margin was -56.34% for 2010.

account for - being able to show exactly what something is; report results accurately
account for assets and liabilities
 
accounting of -
  the act of showing exactly what something is
accounting of assets and liabilities -
showing exactly what the assets and liabilities of an organization or company  are

initialising -
starting, beginning
decade - a period of ten years ทศวรรษ, ระยะเวลา 10 ปี
initialising its first accounting of its assets and liabilities in more than a decade

solvent - a company that has more assets than liabilities (value of "owner's equity" the part of the business owned by owners is greater in value thatn the amount the company owes), not bankrupt
bankrupt -
not having enough money to pay your debts (what you owe others) therefore cannot continue in business, business failure (See Wikipedia)

technically - according to an exact understanding of rules, facts, etc.
technically solvent - meet the definition of "solvent" (but this may not really be the case)

railway operator - a company that operates a railway
while the railway operator had the greatest losses among the country's state enterprises, it was technically solvent, with assets valued at considerably more than its debt

landholdings - land owned by a person, organization or company
large landholdings across the country
but the SRT's finances have suffered from the failure to properly value and manage its assets, which include large landholdings across the country

lacked systematic controls - organization lacked accounting "internal controls"
internal controls -
in accounting, ways of controlling (restricting, limiting, managing) activities in a company or organization so that company achieves  it goals, "in accounting and auditing, internal control is defined as a process effected by an organization's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks). At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations" (See Wikipedia)
accounting system -
accounting information system, a system for recording the use of money in a company or organization and producing "financial reports" every month, quarter, year that show how money was spent and used in an organization and whether financial goals have been achieved (See Wikipedia)
lacked systematic controls and accounting systems

lost revenues and waste - money that the organization could have made and resources it did not have to use to achieve goals (waste)
revenues - money received by a business or government รายได้ของรัฐ
the SRT also lacked systematic controls and accounting systems, causing lost revenues and waste.

lease (noun, verb) - a legal agreement that allows you to use a building, a piece of equipment or some land for a period of time, usually in return for rent (See Wikipedia)
lessee - a person or company that leases a building or land from the owner and has use of it for a period of time
lessees of its properties

monitor - keep track of, regularly check something or watch someone in order to find out what is happening ตรวจ, ติดตาม, เฝ้าสังเกต ตรวจสอบ ตรวจตรา เฝ้าจับตาดู เฝ้าดู จับตาดู
system to monitor lessees of its properties
clear - easy to see and understand
no clear system to monitor lessees of its properties

opportunity - a situation when it is possible to do something that you want to do (See glossary)
opportunity costs - in economics the value of possible choices or decisions, the value of the next best alternative; ; the value of something that could have be done, made, chosen, that is lost when you make a different decision to do something else, looking at the "opportunity cost" or decisions is an important part of the process of economics of making decisions (See Wikipedia)

contract - a written (or oral) agreement that is legally binding สัญญา
obligations - 1. things that a person or an organization must do; your duties and responsibilities หน้าที่ที่พึงกระทำ ; 2. debt, liabilities, money that must be paid in the future to another person  

contract
(noun) - an official agreement between people or companies (usually "written contract" but sometimes "verbal contract") (See Wikipedia)
contractual obligations - things that you must do according to a contract that you have signed and agreed to
failure to meet contract obligations  - when a person fails to do what they promised to do in a contract

no clear
system to monitor lessees of its properties
disputes - disagreements, fights over something, conflicts

the SRT had
no clear system to monitor lessees of its properties, resulting in wasted time and opportunity costs in cases of disputes or failure to meet contract obligations 

preliminary - an early part happening before the final main part; that introduces or prepares for something else ขั้นต้น, ขั้นแรก
key - important คนสำคัญ
for 2010, the SRT reported a preliminary loss of 7.58 billion baht, with accumulated losses of 57.3 billion baht

equity - the value of a company's shares กรรมสิทธิ์หุ้นส่วนในบริษัทห้างร้าน money for a business that comes from owners,  เงินลงทุน ที่มาจากการระดมหุ้นของหุ้นส่วน และผู้มีกรรมสิทธิ the stock shares of company, the money put into a company by its owners; not borrowed money (debt); the total amount of funds that owners have contributed to a firm's operations (usually stock shares)

poor finances - bad financial results (when a company or organization loses a lot of money despite being asset rich)

stem from -
caused by
stem in part from - caused by partly (not whole explanation or cause)

outdated
- old and no longer suitable or useful, old-fashioned
outdated equipment - old equipment that is not useful

pension
- a regular payment by a company or the government to people after their retirement; a system for saving money when young and working to spend during retirement when not working เงินบำเหน็ด บำนาญ  (See Wikipedia)
debt service - making payments on money that was borrowed (interest plus principal = paying back amount borrowed)

The agency's poor finances
stem in part to high operating expenses due to outdated equipment, heavy pension expenses and debt service costs.

stock
- an amount of something that you keep so that you can use it when you need it ที่เก็บไว้ในสต๊อก
rolling stock - the collection of all railway cars used on a railway (See Wikipedia)
rail networks - all the tracks used by the trains and rolling stock in a railway
Only half of the SRT's trains are considered usable, with an average age of 45 years for rolling stock and 34 to 37 years for its rail networks.

rail fares - the amount of money that must be paid to travel by train from one place to another
curbing rail fares - reducing or stopping the rise of rail fares (over time with inflation, as other prices go up)
commuters - people traveling from home to work in the afternoon and evening  คนเดินทางระหว่างบ้านและที่ทำงาน
curbing rail fares for commuters - reducing the amount people have to pay to travel to work on the train
match - to be or look the same as or very similar to something else ซึ่งไม่คู่ควร
price fares to match its costs
limited in its ability to price fares to match its costs
the SRT is limited in its ability to price fares to match its costs, due to government policies aimed at curbing rail fares for commuters

restructure - to reorganize a company to make it work better and more efficiently ปรับโครงสร้างใหม่ ปรับโครงสร้าง
conflicting - having seriously difference that cannot all be right
efforts to restructure the agency over the past several years have made little headway, in part due to weak information databases and conflicting accounts

considerable - large; of noticeable importance จำนวนมาก ค่อนข้างใหญ่
inventory - goods that a company has bought and stores for future use or sale;   the products kept in a shop, warehouse, etc., in this case, unsold cars สินค้าที่จัดเก็บในสต๊อก (See Wikipedia)
records - pieces of information describing something written down or stored on a computer บันทึุก
consistently - continuously; happening again and again in the same way อย่างต่อเนื่อง
refuse - unwanted waste material, especially material that is regularly thrown away from a house, factory, etc.; rubbish ขยะ, ของเสีย
annual - happening once a year ประจำปี
The SRT's assets for instance show considerable discrepancies from its own inventory records, leading the Auditor General's Office to consistently refuse to offer an opinion on its annual financial records.

earmarked - use for a special purpose or programme
funds - money needed or available to spend on something เงินทุน
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
in any case, the government has earmarked 176 billion baht in funds for rail investment by the SRT through 2014

process - a series of actions that you take in order to achieve a result แนวทางปฏิบัติ, กระบวน, วิธีการ
in the process of - doing some activity now (not yet finished)

distinct - clearly noticeable แตกต่างชัดเจน clearly different แตกต่างอย่างสิ้นเชิง
business units - a company run separately from the other companies that a bigger company owns and runs s
distinct business units  

asset - something owned by a person, company etc., particularly money and property ทรัพย์สิน
asset management - here: manageing tall the land, property and real estate that the state railway owns to put it to good use and generate a good return from it
maintenance - the act of keeping something in good condition such as a building, machine, or piece of equipment by checking or repairing it regularly การซ่อมบำรุง

the government also is in the process of splitting its operations into distinct business units, covering rail operations, asset management and maintenance functions

subsidiaries - companies which are owned by a larger company บริษัทสาขา

Airport Rail Link -
a light rail line that connects downtown Bangkok with  Suvarnabhumi International Airport, owned and operated by the State Railway of Thailand (SRT) , opened on August 23, 2010 the 28.6-km route is the fourth rapid transit line in Bangkok แอร์พอร์ตลิงก์, รถไฟฟ้าเชื่อมท่าอากาศยานสุวรรณภูมิ (See Wikipedia)

light-rail system, light rail transit(LRT) -
a modern form of public transportation in cities using electric rail cars (See Wikipedia)

popular
spot - a popular place, a place that many people like

new businesses meanwhile will be developed under 100%-owned subsidiaries, such as Airport Rail Link Co, which operates a light-rail system from inner Bangkok to Suvarnabhumi Airport, and a company set up to operate the Chatuchak Weekend Market, a popular spot located on SRT land

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